Everest Kanto may start selling in China by Oct

Everest Kanto Cylinder, the compressed natural gas (CNG) and industrial cylinder maker, expects to begin selling in the Chinese market by October, its chief financial officer J Sivakumar said.

Everest Kanto plans to cater to the growing original equipment manufacturer (OEM) market in the automobile segment in that country.

“In the next couple of years, China is going to become the biggest OEM market in the world so there is huge potential and there are also gas reserves available,” Sivakumar said.

Vehicles running on CNG constitute less than about 2% of the total number of vehicles there. “The penetration is really low so we stand to gain,” Sivakumar said.

Everest Kanto’s plant in China has a capacity to make 2,00,000 CNG cylinders and an initial capacity to manufacture 3,000 jumbo cylinders per annum (cpa). Jumbo cylinders are used for storage and transportation purposes.

The company currently exports from its Chinese plant to India and Middle East. The plant began production in May last year and Everest has so far invested nearly $27 million in it.

It received the permission to sell finished cylinders in the local market sometime in the third quarter of last fiscal but there have been no sales in that  market due to poor market conditions.

“The second quarter will continue to be muted and we see an improvement in activity the following quarter onwards,” Sivakumar said.

Everest Kanto is yet to decide whether to go ahead with the capacity addition in China. The firm had earlier planned to increase the capacity five-fold to 1 million cpa over a 3-year horizon.

Everest is India’s largest player in cylinders and along with selling to almost all local auto OEMs, makes industrial cylinders which are also used for medical purposes.